The Pakistani rupee appreciated throughout the outgoing week, seeing an improvement of 1.4 per cent against the USD in the interbank market, and is on track to be the best-performing currency this month.

By closing time on Thursday, the dollar stood at Rs287.74, a decrease of 4.02 or 1.4 per cent from last week, according to the State Bank of Pakistan. The previous week it had closed at Rs291.76. The rupee saw consistent gains against the dollar from Monday.

The rupee had hit a record low of 307.1 against the dollar on Sept 5 but has made a sharp recovery since the country’s financial regulator and security agencies began taking action the next day to curb black market operations.

The crackdown on black market operators against the informal market resulted in tens of millions of dollars pouring back into Pakistan’s interbank and open markets, dealers said.

The local currency has seen gains of around 6.1 per cent so far.

“The government’s stern administrative action against the unlawful foreign exchange dealers and hoarders in commodity markets is stabilising the exchange rate, providing a respite to the imported inflation and easing out commodity prices,” the finance ministry had said in its monthly report.

Before the crackdown, the dollar was trading at Rs332 in the open market. The open market saw the dollar depreciate to Rs288.5 on Thursday according to the Exchange Companies Association of Pakistan (ECAP), a trend that continued throughout the week.

However, for the upward trajectory to be sustained, experts advise “attracting foreign direct Investment (FDI) into export-oriented sectors”.

“The rupee has indeed performed well, but this data does not reflect the sharp depreciation preceding this performance. Pakistan’s currency has been one of the worst-performing in recent years,” Fahad Rauf, Head of Research at Ismail Iqbal Securities, told Reuters.

Samiullah Tariq, the head of research and development at Pak-Kuwait Inves­t­­ment Company, expressed optimism over a strengthening rupee but stressed the need to ensure a consistent inflow in the coming months to solidify the PKR’s position. He noted that while sentiments have positively changed, the rupee remains weak year-on-year.

Topline Securities CEO Mohammed Sohail expec­ted the rupee to strengthen in the short run due to regulatory actions. However, he said that the fate of the currency in the medium run hinged on economic fundamentals, especially the foreign exchange reserves and the outcome of the IMF loan review in November.